Will New Tax Plan Hurt California Home Owners?
Will New Tax Plan Hurt California Home Owners?
While it still remains to be seen if the new tax proposal from House republicans ever gets through the Senate and reaches the president, many taxpayers are still concerned about the consequences. One of the largest groups in this category is homeowners in California, not to mention builders and realtors, as well.
So what’s the reason for the concern?
There are actually several. For starters, the House bill would hurt any taxpayer that itemizes his or her deductions and uses the mortgage interest deduction. That’s because that deduction is now in question under the new proposal. The threshold would be reduced from $1.1 million to $500,000.
The bill would also completely eliminate this deduction for vacation homes, while the Senate bill would actually keep it. And lastly, while the House would cap the property tax deduction at $10,000, the Senate proposal would completely cut it.
Because California has such high-priced housing already, these limits and changes would hurt many residents even more. “In a high-priced state where we’ve already got a shortage of homes for sale, this simply traps people in their homes longer,” said Steve White, a Studio City broker who is president of the state Realtors association. Fewer people will move and that will just exacerbate the home shortage.
This is sure to be a hot-button topic for lawmakers as they continue trying to move this bill through. However, many California residents are already pushing their congressman to vote against it.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
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